TVL and DEX activity drop sharply, Solana faces risk of weak demand

Solana’s SOL token dropped 6% after being rejected at the $147 level on Thursday, as investors grew more cautious following weak US labor and consumer confidence data.

Traders are concerned that SOL will take longer to return to the $200 mark, especially since leveraged positions were “wiped out” in October–November, while Solana network activity continues to decline.

Solana’s total value locked (TVL) dropped from $13.3 billion to $10.8 billion over two months, with key projects like Kamino, Jupiter, Jito, and Drift seeing deposits fall by more than 20%. Trading volume on Solana DEXs has also weakened significantly.

Total value locked on Solana (left) versus 7-day DEX volume, USD | Source: DefiLlamaStill, Solana remains the second-largest network by TVL, while Ethereum maintains its dominance at $73.2 billion. Ethereum’s layer-2 ecosystem—including Base, Arbitrum, and Polygon—continues to attract new capital inflows. The recently launched Fusaka upgrade has improved scalability and wallet management, reducing the incentive to move funds to competing networks like Solana.

DEX trading volume on Solana reached $19.2 billion in the week ending November 30, down 40% from the previous four weeks. The decline in on-chain activity has investors worried that demand for SOL will remain weak, creating a negative feedback loop as capital exits the ecosystem. Meanwhile, the newly launched layer-1 blockchain Monad recorded $1.2 billion in DEX trades in its first week.

Layoffs and tightening consumer credit continue to add pressure

SOL reacted negatively after a report from Challenger, Gray & Christmas recorded 71,321 layoffs in November—a rarely seen high since 2008. In addition, several state attorneys general in the US have asked “Buy Now, Pay Later” platforms to provide information about consumers’ ability to repay debt, raising concerns over tightening credit conditions.

Annualized funding rate of SOL perpetual futures contracts | Source: laevitas.chA PayPal survey found that half of shoppers plan to take on personal debt this holiday season, increasing household financial risk.

Demand to take leveraged long positions on SOL perpetual contracts remains very low, with annualized funding rates at just 4%, below the neutral benchmark of 6%. Lack of confidence is also evident as ETF/ETP products related to Solana have not seen any new inflows, while Bitcoin, Ethereum, and XRP have attracted a combined $1.06 billion.

Other altcoins such as XRP, Litecoin, and Dogecoin have just received approval for spot ETFs in the US, adding competitive pressure for institutional capital. Many networks competing with Solana are expected to receive ETF approval in the near future.

Recovery potential depends on macro context

The current downturn makes it less likely that listed companies will issue shares to expand SOL reserves. For example, Forward Industries holds 6.91 million SOL—now trading below its initial cost basis—so issuing shares at this time would dilute shareholder interests.

The prospect of SOL returning to $200 depends heavily on improvements in the macro environment. However, bears could be caught off guard if fiscal stimulus packages are implemented, providing momentum for a broader altcoin recovery.

Vuong Tien